RealtyTrac reported recently that the foreclosure rate is still well above 300,000 a month and could hit a record this year. Housing starts and new home sales are close to their lowest levels in a decade.
But unemployment appears to be driving home sales more than any other factor. The total unemployment rate still hovers around 17%. Consumer access to credit is poor and many people are still too leveraged to apply for and receive addition money. Part of that is due to the negative home equity of over 11 million mortgages.
The government’s homebuyer tax credits lapsed at the end of April and Congress has shown no interest in renewing them. Extremely low mortgage rates have not helped even though according to Freddie Mac, they have never been lower.
The agency reported that:
Mortgage rates for all but traditional 1-year ARMs hit all-time record lows this week in our survey while activity in the housing market slowed in May following the expiration of the homebuyer tax credit. Freddie Mac began collecting rates for 30-year fixed loans in April 1971, 15-year fixed mortgages in September 1991 and 5-year hybrid ARMs in January 2005. The record low for traditional 1-year ARMs of 3.36 percent occurred during the week of March 25, 2004.
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